The Liberal party is in serious trouble, but I think investors have something to look forward to.
So seems Labor’s landslide victory in Victoria caught everyone off guard.
I’m still amazed that this can happen. Facebook and Google know what kind of aftershave I use, but we still can’t get a good handle on voting intentions? Seems a bit buggy to me.
Anyway, the results are in. The Labor Love Fest is off the charts. Biggest win in a generation. I’ll explain what I think it means for wealth strategy in a sec, but first I wanted to step back and look at the bigger picture.
Now, no shortage of ink is being wasted on the Liberal Party autopsy and a good chunk of that is pointing the finger at the shenanigans in Canberra, especially the knifing of Malcolm Turnbull.
But I actually think there are some broader structural issues at work, and I worry that the Liberal party is about to get blindsided into oblivion.
Seriously, they might be toast.
First, I think they’re underestimating where the average voter sits on a lot of issues, and in states like Victoria, the average voter is a lot more ‘progressive’ than I think they realise.
How do I know this?
Daniel Andrews told me so.
“Progressive” is a relatively new term in the Australian political vocabulary, and it’s never really featured much in political branding. And you wouldn’t use it much anyway. It’s like ‘conservative’. Conservative might describe your base, but you’re trying to win votes in the political centre, so you use language that speaks to that.
But Daniel Andrews is using “progressive” and using it a lot.
In his short victory speech he said, “Friends, we are the most progressive government in the nation. We are the most progressive state in the nation.”
And it’s not new. Remember when the Gay Marriage issue was decided:
The most progressive government in the most progressive capital in the most progressive state…
This isn’t an accident. This is deliberate language use, and the Labor party must know it’s polling well. Which means that it’s a term that now sells to the political centre in Victoria.
To the Liberals, and their infamous conservative faction, this is very bad news.
They must have known they were taking a gamble. In knifing Turnbull, they were saying they were willing to risk some inner city seats to save some marginal seats in Queensland. But then they f-ed it up royally, when, rather than making Dutton leader – the only person who could save those seats in Queensland – they gave us Morrison, who is just a bit yeah, nah with everybody.
So they sacrificed Victoria and achieved nothing.
But there’s something else Andrews is doing here. He’s not just speaking to the centre; he’s creating a Victorian political identity. He’s saying Victoria votes for progressive parties just because it is Victoria.
If he can succeed in getting people to associate “progressive” with “Victorian” – to see them as one and the same – then he will have locked Labor in for a generation.
It’s like the blue state / red state phenomenon in America. States like California are locked in blue states (Democrat), and proudly so. It becomes a badge of pride.
Victoria is Australia’s first blue state (or red state really).
This is clever. Very clever.
And I don’t know the Liberal party has a counter-play. To do something similar, it has to go against the tide of history. They could try to take Queensland, but it’s hard to imagine a Queensland Premier running a campaign around “the most conservative government in the most conservative state.” It’s a promise to be backward looking. It doesn’t have the same ring to it.
And to do so, they’d need to abandon a large chunk of their voter base – the voters that don’t really resonate with the term ‘conservative’.
Voters like me.
I’ve voted Liberal most of my life. I did on the weekend. But I don’t identify as “conservative”. I don’t look back at the past and think we need more of that. I’m forward looking. I’m excited about change. I’m excited about the future.
I’m much more Malcolm Turnbull than Peter Dutton.
I vote Liberal because I believe individual freedom should be society’s primary goal. I vote Liberal because I believe enterprise and endeavour are the cornerstones of a successful society. I vote Liberal because I believe that our soft hearts need to be guided by sensible, hard heads.
It’s never been about whether there’s enough flags or bibles in our schools.
So the Liberal party is in trouble. Unless they can figure out a way to build a tent large enough to hold both their progressive and conservative voters, it will tear itself apart.
… if that hasn’t begun already.
That’s my thoughts.
And so, I promised I would look at what I think it means for wealth strategy too.
I think the Victorian election showed us we’re on the verge of a Labor nation. I think the Coalition is in trouble Federally and in most states.
If they get the mandate I expect, like they did in Victoria, then expect some pain. Expect a tough response to the Royal Commission. Expect no mercy on the interest only to principal reset. Expect negative gearing to go.
That might freak some people out. Amateurs might bail out of the market at that stage.
But I think Labor will be smart enough to try and spend their way through the pain. Expect a spending spree based around ‘fairness’ – first home owner grants to low income earners, an increase in the dole, more money for schools, hospitals and infrastructure in general. Stuff like that.
In the medium term, that will give the economy a boost. There’ll be more for everyone (so long as commodity prices continue to support the budget bottom line).
So keep your eye on this. Don’t bail too early. Look for serious reform and strong but sustainable spending.
There might be some short term pain, but it will pay off in the medium term.
And watch for that term ‘progressive’. See if the media picks it up and runs with it.